Indian Partnership Act, 1932 – s.42(c) – Predecessor-ininterest of the appellants and that of the respondents entered into partnership for carrying on business in real estate, by developing the land which formed part of Paigah Compound – Predecessorin-interest of the respondents is the owner of open land with structures situated in Paigah Compound bearing no.156-159 admeasuring 22,253 sq. mtrs. approx. – Predecessor of the appellants filed suit – Major portion of the land was developed– Dispute to an extent of 3381 sq. mtrs., claimed by the plaintiff, forming part of Property No.156-159 of Paigah Compound – Suit decreed – Predecessor of the appellants and the respondents died – Appellants filed Execution Petition before the Trial Court – In the Execution Petition, respondents filed application u/s.47, CPC, 1908 – Allowed – Challenged by the respondents – Allowed by the High Court – On appeal, held: Reliefs sought in execution petition are going beyond the scope of the decree – Executing Court cannot travel beyond the decree – In the present case, there were only two partners, the partnership itself stand dissolved, in view of death of a partner – Once the partnership comes to an end, by virtue of death of one of the partners, there will not be any partnership existing in which legal representatives of late respondents could be taken in – Decree obtained by late predecessor of the appellants against late predecessor of the respondents, in pursuance of the partnership deed, cannot bind the legal representatives of late respondents, as such, the decree is not executable against them – When such legal representatives are not parties to the contract, such contract cannot confer rights or impose obligations arising under it on any third party, except parties to it – Executable decree depend on the rights litigated by the parties – Original decree was obtained against the predecessor of the respondents, who was party to partnership deed– Thus, when the partnership stands dissolved statutorily, by operation of law, in view of provision u/s. 42(c) of the 1932 Act, the question of execution in pursuance of the decree does not arise – No error committed by the High Court by dismissing the Civil Revision Petition filed by the appellants – Code of Civil Procedure, 1908 – s.47. Dismissing the appeal, the Court
HELD : 1.1 In the case on hand, as much as there were only two partners, the partnership itself stand dissolved, in view of death of a partner. It is true that as per the deed of partnership, the partners have agreed, in the event of death of either party, their respective legal representatives shall automatically become partners in the partnership firm and they shall continue to act as partners of the firm, till the venture envisaged under said partnership is completed and such legal representatives who become partners shall have the same rights and shall be subject to same liabilities and responsibilities, as the deceased partner. Once the partnership comes to an end, by virtue of death of one of the partners, there will not be any partnership existing in which legal representatives of late predecessor-in-interest of the respondents could be taken in. The judgment and decree obtained by late predecessor-in-interest of the appellants against late predecessor-in-interest of the respondents, in pursuance of partnership deed dated 14.04.82, cannot bind the legal representatives of late predecessor-in-interest of the respondents, as such, decree is not executable against them. The legal representatives of late predecessor-in-interest of the respondents are not the partners of the original partnership deed dated 14.04.82. When such legal representative are not parties to the contract, such contract cannot confer rights or impose obligations arising under it on any third party, except parties to it. No one but the parties to the contract can be entitled under it or born by it. Such principle is known as ‘Privity of Contract’. When the partnership stands dissolved by operation of law under Section 42(c) of the Indian Partnership Act, 1932, the question of execution in pursuance of the decree does not arise. There cannot be any contract unilaterally without acceptance and agreement by the legal heirs of the deceased partner. If there are any clauses in the agreement, entered into between the original partners, against the third parties, such clauses will not bind them, such of the clauses in the partnership deed, which run contrary to provisions of Indian Partnership Act, 1932, are void and unenforceable. Such clauses are also opposed to public policy. [Paras 16-18] [505-A-G]
1.2 The executable decree depend on the rights litigated by the parties. In the case on hand, the original decree was obtained against the predecessor of the respondents, who was party to partnership deed. In view of death of one of the partners, the partnership itself stands dissolved statutorily, by operation of law, in view of provision under Section 42(c) of the Indian Partnership Act, 1932. When the respondents are not parties to the partnership firm, they are not bound by the decree obtained by the predecessor of the appellant. More so, when it is a case of the respondents that they have not derived any assets and liabilities arising out of the partnership firm, decree obtained by the original plaintiff is not executable against the respondents. During the life time of late predecessor-in-interest of the respondents, she also filed Suit in O.S. No. 1061 of 1990 on the file of VII Senior Civil Judge, City Civil Court, Hyderabad, for dissolution of partnership firm constituted under deed of partnership dated 26.06.1977 and also for rendition of accounts. It is true that same is a different partnership but, parties are same. In such suit filed by late predecessor-in-interest of the respondents, predecessor of the appellants, filed IA No. 1649 of 1997, to dismiss the said suit, claiming that in view of death of one of the partners, during the pendency of the suit, there is no room for third party to be introduced. It was the case of late predecessor-in-interest of the appellants that partnership stood dissolved. However, in a similar situation arising out of partnership deed dated 14.04.1982, the appellants claim the decree is executable against the respondents, who are the legal heirs of the judgment-debtor. The respondents were not parties to the partnership deed and the partnership stands dissolved, in view of death of one of the partners, the respondents have not derived the benefit of assets of the partnership firm, the decree obtained by the predecessor of the appellants, is not executable against the respondents. The Trial Court rightly allowed the application filed by the respondents under Section 47 of C.P.C. and there is no error committed by the High Court, in confirming such order by dismissing the Civil Revision Petition filed by the appellants herein. [Paras 21-23] [507-C-H; 508-A] Prabhakara Adiga v. Gowri and Others (2017) 4 SCC
97 : [2017] 1 SCR 724 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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